Motorola is bringing in salary freezes and slashing pension benefits to cut costs as the recession continues to...
bite the IT sector.
From 1 March 2009, Motorola will permanently freeze its US pension plans, preserving vested benefits accrued by employees and retirees but eliminating future benefit accruals.
Motorola says it intends to continue to provide funding to meet its pension obligations to present and future retirees.
From 1 January 2009, Motorola will also temporarily suspend all company matching contributions to the US Motorola pension plan. US employees may continue to contribute to the plan but will not receive matching contributions from Motorola.
The company has not said for how long it will not offer matching funding for scheme.
The company has also said "that employees in many of the markets in which it operates will not receive a salary increase in 2009".
In addition, Motorola co-chief executive officers Greg Brown and Sanjay Jha will voluntarily take a 25% decrease in their base salaries in 2009.
Brown will also voluntarily forgo any 2008 cash bonus earned under the Motorola incentive plan.
Jha's employment contract provides for a guaranteed cash bonus for 2008. His bonus will also be voluntarily reduced by an amount equal to Brown's forfeited bonus, and the remainder will be taken in the form of restricted stock units.
The latest cost-cutting measures are expected to lead to cost savings in addition to the $800m in cuts that were previously announced in October.
These cuts included another 3,000 job losses, at a company that has shed thousands of jobs over recent years in response to losing market share in phones, network equipment and other products and services. The latest recession, therefore, is not the only reason the company is contracting further.
"The sustained downturn in the global economy requires that we take these difficult but necessary steps. While serving our customers remains a top priority, we are equally focused on our cost structure, and we will continue to implement appropriate measures to conserve cash and reduce expenses," said Motorola.